Auto Bailout Agreement Remains Elusive
A loan package to bail out the teetering U.S. auto industry is heading toward a vote this week in Congress. But at the close of business on Dec. 9, the Senate, the House of Representatives, and the White House were still short of a compromise that could win passage.
At issue, say Capitol Hill staffers and lawmakers, are concerns of the White House and Senate Republicans that the bill does not go far enough to require investors who hold the automakers' unsecured debt, as well as the United Auto Workers, to make concessions that will ensure the companies' viability once they get taxpayer-funded loans.
"There will be no long-term financing if they cannot prove long-term viability," said White House Press Secretary Dana Perino.
There is also debate over the authority of a so-called car czar, who would be appointed by the White House to report to Congress and different Cabinet members on the progress of restructuring plans adopted by the companies, debt holders, unions, and even car dealers.
The bill would authorize $15 billion in loans, which would be divided between General Motors (GM) and Chrysler, the two U.S. automakers that are facing the most dire and immediate risk of financial collapse. Ford Motor (F) has enough cash to last into 2010, the company says, provided U.S. auto sales don't totally collapse next year. Ford is looking for a $9 billion line of credit at a later date, from either Congress or from the Obama Administration's exercising authority to distribute money from the $700 billion Wall Street bailout fund.
Vote Stumbles on Details
Senate Majority Leader Harry Reid (D-Nev.) said there are senators who have threatened to exercise their right to put a hold on the vote, which would stretch the process out through the weekend and potentially into January. But he and other Democrats are hoping to find the necessary 60 Senate votes this week through compromise language in the bill. "We're going to have a vote on this some time," Reid said. "We can have it sooner, or we could have it later."
House Financial Services Committee Chairman Barney Frank (D-Mass.) said Tuesday he believes the House has enough votes to pass the bill.
The core parts of the bill call for a car czar to bring the companies, unions, debt holders, and dealers together to work out compromises that would reduce the automakers' debts and obligations to active and retired workers. Republicans, who have advocated letting the automakers go through Chapter 11 bankruptcy to reorganize, want concessions from those stakeholders spelled out in the bill. That would be difficult to secure this week.
Controversial Car Czar Role
There is also skepticism in the White House and Congress that a car czar should have so much power that he or she could veto car programs and mandate that the companies build certain kinds of cars, such as hybrids.
Without loan help, GM and Chrysler would be in danger of running out of cash by January. The companies' sales have been hammered by the recession and lack of available credit for consumers.
If the bill gets stalled this week without enough votes to pass, the next step will be to see if GM and Chrysler can last until Jan. 6, when the new Congress convenes with larger Democratic majorities in the House and Senate.